A rate rise will be ‘in play’ at every RBA meeting from July.

Dr Brendan Rynne, KPMG Chief Economist comments on today’s interest rate announcement.

Even with the current surge in house prices, the RBA has not changed the cash rate today – no surprise, given it has been signalling rates could stay at historically low levels until 2024.

The RBA was obliged to cut rates to 0.25%. It is right that monetary policy should be working in a co-ordinated manner with the government’s fiscal stimulus packages.

The RBA will and should cut rates to 0.25 percent.

Last month it was a 50-50 call on whether the RBA would reduce the cash rate. This month it was a lot clearer – rates were rightly cut by 0.25 percent today and there will probably be another 0.25 percent cut next month.  

I believe the RBA was, on balance, correct to hold rates today – but it must have been a tough call.

I would suggest that the most prudent action from tomorrow’s Board meeting is for the RBA is to keep rates on hold.

While the decision to cut the cash rate by 25bp to 0.75 percent was priced into the market as a near certainty, the factors influencing the outcome were certainly not straightforward.